You might feel swept away by the holiday mayhem when you’re changing seasonal decor, catering another office party, prepping take-and-bake orders, and prepping your restaurant for another family dinner. But you don’t just want to survive the increased demand, you want to capitalize on the surge.
Even in December, it’s not too late to end the year with a bang. Here are five financing tips to optimize your business plans and leverage funding products to maximize your restaurant’s holiday season.
1. Tighten Your Cash Flow
Having the liquid funds to keep your restaurant running is the top priority to maximize the holiday season. Without liquidity, increased costs for ingredients, overtime wages, seasonal decor, or utility bills might erode your profit margin.
Start by finding ways to cut costs and increase profits in your daily operations. Negotiate discounts or credit with your vendors and push specials featuring ingredients you already have. Use past records to streamline your labor costs by assigning shifts efficiently.
Once you see where your income will fall short, use financing to cover the funding gaps. A business credit card allows you to make multiple small purchases, such as for small ingredient shipments or decorations. You could also use working capital funding to cover larger, short-term expenses, like payroll or utilities.
When you use financing to handle these immediate problems, make sure the payback timeline matches your busy season. Use the holiday revenue to pay off short-term credit and remain liquid, avoiding long-term debt.
2. Speed Up Incoming Payments
Whether your restaurant caters for multiple events or offers a special holiday menu, you’ll spend time waiting for the backlog of credit cards and clients to pay their invoices. And that strain on your working capital can limit your opportunities or even threaten your daily operations.
Free yourself from the time constraint by speeding up the incoming payments. You could promote gift cards and reward programs. Or you could offer discounts to customers who pay in cash and companies that prepay for your food at their parties.
Restaurant funding options like invoice financing or a merchant cash advance (MCA) can also help speed up your payments. These funding options give you a portion of your future income now. Then you repay the amount plus borrowing fees with your income. Using financing to speed up your revenue opens up more opportunities and delivers more profits.
3. Fund Projects with High Returns
When your restaurant gets approved for a loan or credit line, be deliberate about how you use your funds. Focusing on projects that directly improve service and generate revenue can maximize your profits.
For example, say you secure a short-term hospitality business loan and fund a holiday marketing campaign. You can draw in last-minute party bookings, gift card sales, mid-week bookings, or take-and-bake orders before the end of the season. Using the loan this way leverages the time crunch in your favor and contributes toward repaying the borrowed funds.
4. Prepare for the New Year
A great December can easily become a rough January if you don’t prepare for the seasonal dropoff. With the right plan, you can carry momentum from the holidays into the new year.
You have lots of business during the holidays, so build in marketing plans that will get them to come back next month. Offer loyalty or rewards programs with promotions for customers in January. Advertise a winter special or healthy menu for the next month. These small actions can bridge the change in seasons for your restaurant.
The new year is great for leveraging your strong holiday finances and securing funding. You’ll qualify for more competitive rates and significant loan amounts now than if you wait until you’re desperate.
And, you can use the borrowed capital to prepare for a more profitable year. For example, you could use equipment financing to add another commercial oven to the kitchen or update the point of sale (POS) system.
But take a disciplined approach to all your preparations. Set aside some of your holiday profits to cushion your January cash flow. Borrow only what you can afford and invest in revenue-increasing projects. With caution and foresight, you can protect your business from the boom-and-bust cycle that hurts so many restaurants after the new year.
5. Track Your Holiday Business Rhythm
Collecting data about your business during the holidays can help you tighten your cash flow for the rest of this season and prepare for next year. The more you know now, the less scrambling you’ll do later.
Save and track your sales data, staffing costs, supply orders, seasonal menu items, receipts for decorations, and event schedules. You won’t have time for a complete analysis until things slow down in January, but you can look for areas to improve right now. These cutbacks could include scheduling fewer front of house employees for weekday lunches if you typically see takeout orders.
Knowing your busy season rhythm helps you seize current opportunities, maximize your capital, successfully leverage financing, and continue to improve each year.
The Gift That Keeps on Giving
Streamlining your business operations and strategically financing your restaurant maximizes your success this holiday season and sets you up for a profitable new year. It’s the gift that keeps on giving.
So even though it’s challenging to make changes between party reservations and turkey orders, doing it will give your restaurant the best present this season: a bright future.
